Manufacturing Structure and Financial Constraints in a Dualistic Economy

by Domenico Sarno and Cristiana Donati

Keywords: Firm Growth; Firm Size; Liquidity Constraints; Panel Data

In most European countries mainstream financial institutions are scantly able to provide affordable credit facilities to small firms. In Italy in the last decades, the wave of mergers and acquisitions has reduced the number of banks and created large national and multinational bank holding companies; this process has changed lending behaviour and the relationship between banks and firms, forcing small firms to finance their growth almost exclusively through retained earnings. Using a large firm-level panel data set to analyze the relevance of liquidity constraints on firm growth in Italy, we will show that the severity of liquidity constraints hit the growth of SMEs, in particular in the Southern “backward” regions of Italy. The dependence of firm growth on inside finance is more intense for firms operating in the less developed regions of the country. To analyze the impact of liquidity constraints on firm growth we will carry outsuch analysis also considering growing cash-flow sensitivity within the main industries of the manufacturing sectors to evaluate if specific patterns prevail among the different industries examined.

The “long crisis” started in 2009 was, in terms of intensity and pervasiveness, a discontinuity factor which considerably affected Centre-North and South of Italy’s production. In this paper changes in the international specialization model of these two areas are analysed. In addition to this, some assessments on the degree of resilience shown by foreign sales of such two macro-areas and on their different participation in “global value chains” are made. Also in this respect, as for other important structural parameters, southern responsiveness appears, at the end of the “long crisis”, comparatively lower.

Several studies have addressed the issues concerning the ability of the Sicilian companies to hold an international competition, that is becoming more intense due to the increased integration into the world economy and the competition from other countries in advantage for lower production and input costs. Over the last years, there have been several trends relating both to the expected loss of competitiveness of Sicilian businesses and the ability of some export-oriented businesses to survive the economic crisis compared to other domestic market-oriented businesses. This is because the latter, especially the smaller ones which continue to be the main characters of the internationalization process, show a good ability to preserve and enhance their competitive advantages by engaging in significant changes in the strategic choices and partially modifying their geographical direction. In this regard, the aim of this paper is to highlight how, in the context of the internationalization of the Sicilian companies, while showing the strong limits of “light” internationalization, a group of companies, which exceed the first integration problems, is emerging, and once overcome the classic opposition export / direct investments, may contribute to a definite improvement in Sicily in terms of economic growth. On the basis of such assumptions, this papergives an interpretation of some of the recent changes in the methods of approach to foreign markets by Sicilian businesses as well asof their future prospects.

Many European countries are moving from linear to circular economic models. In this respect, Italy has proved to be very active by developing a thriving bioeconomy sector thanks to the dynamism of its private sector, trade associations, technological clusters and non-profit organizations. Indeed, until the launch in 2016 of the national strategy on bio-economy (in Consultation Draft version), Italy was lacking a structured vision on the bioeconomy. However, various institutional actors supported in various ways the development of the Italian green chemistry. This was achieved through the implementation of effective market push policies, that could now be implemented with public procurement actions and new economic tools especially within cohesion policy as envisaged by the Italian Bioeconomy Strategy. Moreover, the bio-economy has proven to be a powerful leverage tool for local and regional development. Of note in this respect is the particular dynamism shown by Southern Italy due to the presence of important research centers and of some cutting-edge production sites. Important opportunities come from second generation biomass, in which Italy is a leading European actor, that exploit waste and non-food crops in marginal lands. The latter represents an important challenge also in tackling organized crime.

The Italian Reform of Local Agencies for the Government of Extended Areas. On the Legal and Economic Consequences of the Failed Renzi-Boschi Constitutional Reform

by Salvatore Villani

Keywords: Local Government Finance; Regional Government Analysis; Local Government Taxation and Revenue; Interjurisdictional Differentials and their Effects.

Several European States have started a deep revision of their structures of local government in an attempt to strengthen the involvement of cities and local agencies in the EU policy-making process. This reform process, however, in some cases, has not followed the principles of local democracy suggested (in 2012) by the Council of Europe and has not taken into account the real needs of citizens in the use of public services. In Italy, for example, it was driven exclusively by an unjustified obsession to achieve, at any price, a reduction of public expenditure. This obsession has marked the beginning of a real trend reversal with respect to the phase of enhancing the role of local governments, which started in the 90s and continued, without any particular problems, until the XVI legislature. The natural outcome of this new reform phase is represented by the so called «Delrio Act» and the recent attempted revision of the Constitution, which received a sonorous rejection by the electorate and which now threatens to scupper the whole reform project of the local Autonomies. This paper addresses some topics aimed at highlighting the critical issues of the aforementioned reform project. In particular, the paper analyses the issue of the recent unsuccessful attempt to revise the Italian Constitution and its consequences from a legal, economic and financial point of view. A special section analyses, in terms of resources and their adequacy (with respect to the public services), the crucial issue of financial sustainability and the overall resilience of the current financing system of local agencies for the government of extended areas.

The Electricity Sector in South Italy in the first 25 Years of the XX Century: between Opposition and Innovation and Development Opportunities

by Marco Santillo e Andrea Pomella

Keywords: South Italy; Electricity; Great War

Declined in the context of Southern economy of the first two decades of the XX century, the study of the origin and early evolution of the electricity sector allows to retrace, from a vantage point, the first season of the industrialization of the South, which was inaugurated by the special law of 1904 and by the affirmation of the Nitti’s model of industrial start-ups. Great opposition and a number of opportunities for the development of southern energy sector wouldarise, in the years of the ‘Great War’, due tothe dramatic changes, in terms of logistics, caused by the War Economy system. A series of twists and challenges emerges from this paper, that makes the study of the electricity sector particularly interesting, since wide-ranging historical analysis, carried out in terms of path dependence, could allow us to discover crucial passages sometimes neglected in the literature, but important to provide useful insights for those engaged in theoretical work on southern industrialization delay. The seeds painfully sown between the beginning of the twentieth century and the years of the Great War would eventually bear fruit in the following decade, when – to paraphrase Cenzato – one could say that the history of electricity, due to the absence of other major initiatives, became the history of South Italy’s industry, and southern Italy had now enough energy to cover the needs of its industrial facilities and its civil life.

This paper contributes to the forthcoming debate on the reform of European cohesion policies providing two main recommendations. First, we highlight the need for policies’ improvements in order to i) maintain or even increase the resources allocatedto less developed regions; ii) simplify procedures; iii)define a mission oriented towards new generations. Secondly, cohesion policiesshould be part of a general European economic governance that includes regional convergence among its general objectives. In this perspective, the future agenda should include three priorities: iv) a golden rule for strategic public investments; v) a suitable fiscal compensation system to compensate the Italian Mezzogiorno and other EU-15 less developed regions for the competitive disadvantages caused by tax dumping and other national structural imbalances, particularly within the Eurozone; vi) rebalancing current Union geopolitical setups by prioritizing EU’s Mediterranean policies.

The session organized by the SVIMEZ within the XXXVII AISRE Conference on Matera is amongst the most interesting attempts to identify and define a strategy to optimize the potential of a wide inland area, in the continental South and representing a linkage among strong regions such as Basilicata, starting from an absolutely valuable urban setting. The Basilicata region poses the paradox of being geographically both central and peripheral in southern geo-economics. Whereasin the map of development an area can be central only if the reasons of cohesion strengthen and the fault lines of division between coastal and inland economies are tackled. In this scenario, Matera may experience a double historic opportunity: winning a productive and civil bet and representing the leverage to construct the connective tissue of a South reassembled in its unitary character and consistency. Matera as European Capital of culture has to be considered as a paradigm of an expansive process that not only enhances its urban, economic and civil heritage, but also uses itas an infrastructure for the region as a whole and this may be one of the most original features that SVIMEZ has proposed to the country with the “Report 2016” and is committed to developing in 2017. Matera was the “place” of the social question and enjoyed a privileged vantage point of urban, social and anthropological, political and scientific observation; furthermore, it successfully tested literature, painting and cinema. It is an extremely attractive city and a “fertilizer” that can be useful as a global resource and can be beneficial to itself and to the entire region if it is the basis for those interventions that more effectively can contribute to the cohesion of the economic and civil system in which it is inserted: first through the modernization of the rail backbone Salerno-Taranto and its connection via Ferrandina to Matera (a city cut off by the state railway system). Then it is necessary to integrate the port and the dry port of Taranto through the creation of an agro-industrial platform and the associated recognition of the Taranto-Matera area as a SEZ that values the unique peculiarities of the historical and archaeological site once belonging to the Magna Grecia.

The aim of this paper is to provide a macroeconomic framework of the conditions and challenges to relaunch an in-sight development process, and on the occasion of an event, “Matera 2019”, whose potentials exceed the boundaries of the city and cover a larger area and the region as a whole. It is a region that is very sensitive to the business cycle called to the challenge of product diversification, to overcome the paradox of its central geographical position and, at the same time, of its isolation in the southern context. In this framework, 2019 offers Matera an important chance on condition that it becomes an opportunity for a “balanced” and “durable” development process. Balanced, because it is not limited to tourism and creative activities, whose potentials have to be promoted as well, but it is also linked to the relaunching of infrastructure and energy, light industry and agribusiness, thanks to integrated logistics too. And durable, because it cannot be limited to a cultural appointment but has to fit into a strategic development plan, whose benefits for the citizens, and not only for visitors, must continue to accrue over time.

Within the ample scope of urban regeneration, a very particular role is played by the part relating to the culture-led component, that is, regeneration based on both tangible and intangible cultural heritage. In the European and North American scientific literature, culture-led regeneration has not theoretically unambiguous meaning and, anyway, the experiences suggest distinct features, as shown by some of the most important cases: Bilbao, Glasgow, Newcastle, Liverpool, the Ruhr region, Leipzig. In Italy, there is not a tradition of similar studies, which is definitely cause for wonder if we consider how broad, spread and significant is cultural heritage in our Country. Similarly, cases of practical application appear limited, despite being present situations entirely comparable to those of the above-listed cases. Such a situation leads to the conclusion that it is necessary to follow a path that gives culture a leading role in the regeneration processes of the city. In this sense, the designation of Matera as “European Capital of Culture 2019” is a not-to-be-missed opportunity to start a coordinated set of training, research and planning activities, that, from 2019 on, make Matera a point of reference for national regeneration policies based on culture.

Matera as a Capital of Culture in 2019 is perhaps a unique opportunity to make the city fully accessible and ensure that it can be, with its vast area, a linkage in the internal relations of the Basilicata regionas well as with neighbouring regions (Campania, Puglia and Calabria) in a Euro-Mediterranean perspective. A first step involves the efficiency of the railway line Bari-Matera, and the definition of road lines to connect Matera with the airports of Bari and Taranto. One could take advantage of the Gulf of Metaponto and the port of Policoro to establish ferry lines and routes of lesser tonnage cruise ships devoted to luxury cruises. The connection to Matera could be guaranteed by road shuttles. In the medium term, also taking advantage of the impetus gained thanks to the events linked to Matera Capital of Culture, the construction of a transverse axis between the Tyrrhenian sea and the Adriatic Sea intersecting with the perpendicular axis of the Ionian Sea (area of Metaponto and Taranto Port area) could be started. Such a configuration would allow Matera and the Basilicata region to strengthen its internal market and make the most of relations with neighbouring regions, following an overall logic correctly represented by Territorial Supply Chains.

This paper presents a sub-system analysis based on a social accounting matrix specially built for the Basilicata region. Such analysis aims to evaluate the weight (both as to production and as to employment) of Basilicata’s agricultural and agribusiness sector on the regional and extra-regional economic system; it aims to describe how the value added and the wealth generated by direct, indirect and induced effects is distributed among the various productive sectors; finally, it highlights structural strengths and weaknesses and suggests possible development strategies also in relation to the new planning of rural development policies. The results presented show that the availability of a properly disaggregated regional multi-sectoral model of the economy, is an important tool to support regional policy decisions for both innovation and the development of rural areas.